Amid uncertainty in international markets and local policy, business confidence in South Africa has plunged to a three-year low, a chamber of commerce survey revealed Nov. 7. "The BCI, after bouncing back to 98.7 in September 2007, dropped to 96.9 in October 2007 which is the lowest level for the BCI since June 2004 and a new low for 2007," said the survey by South African Chamber of Commerce and Industries (SACCI).
"Businesses are becoming more concerned about international economic developments as well as local adjustments taking place," SACCI economist, Richard Downing said.
"The subprime problems in the U.S. have not only affected the financial markets, but have also led to growth prospects declining. The corrections and adjustments that have followed on some unsustainable domestic economic developments over the past two to three years are now affecting the South African economy more harshly," Downing added.
Business confidence has been on the decline recently after sustaining a moderate trend since the beginning of 2007.
Downing said the slowdown came on the back of "favorable business conditions that could either not be sustained or conditions that were based on unrealistic short to medium-term economic developments." He said the strength of the rand was also failing to "put the balance of payment issues on the right track." Downing said business should be prepared for an environment that was more fickle than predictable.
"The loss in confidence will affect consumers' spending and make it difficult for exporters to do business," Downing added.
Copyright Agence France-Presse, 2007